The Community Interest Company (Amendment) Regulations 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations exercise powers in the Companies (Audit, Investigations and Community Enterprise) Act 2004 (c.27) (the “2004 Act”) and amend the Community Interest Company Regulations 2005 (S.I. 2005/1788) (the “Principal Regulations”).

These Regulations come into force on 1st October 2009 and extend to the whole of the United Kingdom, reflecting the extent of the Companies Act 2006 (c.46).

Regulation 2 repeals subsections (1) and (2) of section 40 of the 2004 Act with the consequences that a Scottish charity may become a community interest company and subsections (4) to (7) of section 40 come into force (see section 40(3) of the 2004 Act).

Regulation 3 amends regulation 2 of the Principal Regulations (interpretation).

Regulation 4 modifies the definition of what constitutes a section of the community.

Regulation 5 permits certain community interest companies to convert into industrial and provident societies. It applies section 53 of the Industrial and Provident Societies Act 1965 (c.12) and section 62 of the Industrial and Provident Societies Act (Northern Ireland) 1969 (c.24) with modifications to community interest companies, as provided for in section 56 of the 2004 Act.

Regulation 6 makes amendments consequential on provisions of the Companies Act 2006 coming into force.

Regulations 7 and 8 are savings provisions, permitting community interest companies that are in existence prior to 1st October 2009 to maintain their articles of association in accordance with Schedule 1, 2 or 3 of the Principal Regulations, as applicable, as Schedule 1, 2 or 3 read immediately prior to 1st October 2009.

Regulation 9 adds a provision to paragraph (1) of regulation 12 of the Principal Regulations relating to the Scottish Charity Regulator consequent on section 40 of the 2004 Act having been amended to permit Scottish charities to become community interest companies.

Regulations 10 to 15 make amendments consequential on provisions of the Companies Act 2006 coming into force.

Regulation 16 restores the provisions originally found in regulation 26(1)(c) and (3) of the Principal Regulations but with changes consequential on provisions of the Companies Act 2006 coming into force.

Regulations 17 and 18 make amendments consequential on provisions of the Companies Act 2006 coming into force.

Regulations 18 to 22 make amendments to the provisions prescribed for the articles of a community interest company.

Regulations 19 and 20 extend the definition of “asset locked body” to include industrial and provident societies which have a restriction on the use of their assets in accordance with the Community Benefit Societies (Restriction on Use of Assets) Regulations 2006 (S.I. 2006/264) or the Community Benefit Societies (Restriction on Use of Assets) Regulations (Northern Ireland) 2006 (S.R. (NI) 2006 No 258), which means that a community interest company can transfer assets at an undervalue to such industrial and provident societies, in accordance with paragraph 1(2) in each of Schedules 1, 2 and 3 to the Principal Regulations.

Regulation 21 revokes sub-paragraphs (2) to (5) of paragraph 3 in each of Schedules 1, 2 and 3 to the Principal Regulations thus removing the restrictions on giving powers to persons who are not members of the community interest company to appoint and remove directors.

Regulation 22 removes the right of a chairman to have a second or casting vote in the case of an equality of votes at a board meeting and removes the right of an alternate director, in the absence of his appointer, to have a separate vote on behalf of his appointer in addition to his own vote.

Regulation 23 substitutes Schedule 5 to the Principal Regulations to make amendments consequential on provisions of the Companies Act 2006 coming into force.

An Impact Assessment has not been prepared for this instrument as it is not anticipated that these changes will lead to any significant costs or burdens.